MUNICH (Reuters) - The United States and Russia formally inaugurated their new START nuclear arms treaty on Saturday, capping two years of work to "reset" the sometimes strained ties between the former Cold War enemies.

U.S. Secretary of State Hillary Clinton and Russian Foreign Minister Sergei Lavrov exchanged the final START documents at the Munich security conference, where two years ago U.S. Vice President Joe Biden launched the Obama administration's push for better relations with Moscow.

"Two years ago we all laughed about the translation of the ceremonial 'reset' button I gave to the Foreign Minister," Clinton said, referring to a diplomatic gaffe in which she presented Lavrov with an oversized button on which "reset" was mistranslated into the Russian for "overcharge."

"But when it came to the translation that mattered most, we turned words into action to reach a milestone in our strategic partnership."

Russian President Dmitry Medvedev and U.S. President Barack Obama signed the deal in April after a year of tough negotiations, committing the world's top two nuclear powers

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The START treaty has been at the center of Washington's effort to improve ties with Moscow, which hit a low with Russia's 2008 war against pro-western Georgia and were further strained by disagreements on trade and U.S. concerns over Russia's record on human rights and free speech.

U.S. officials say the "reset" has delivered results on a number of fronts including efforts to rein in the nuclear ambitions of Iran and North Korea, cooperation on the halting Middle East peace process and growing ties between Russia and NATO.

The START treaty itself is also seen as an important step toward Obama's goal of nuclear disarmament -- though analysts say there are much higher hurdles ahead if further progress is to be made.

FACING DOWN OBJECTIONS

Obama faced down sharp objections from some Republican senators, who said the new treaty gave too much away, to win Senate ratification late last year in a major political victory.

The START treaty commits the two nations, with 95 percent of the world's nuclear weapons, to ceilings of 1,550 deployed strategic warheads in seven years, up to 30 percent lower than in the 2002 Moscow treaty.

It will limit each side to 700 deployed strategic missiles and bombers and establish verification rules, absent since the U.S.-Soviet Strategic Arms Reduction Treaty (START I) expired in 2009, enabling them to keep tabs on each other's arsenals.

Now the treaty has taken effect, the two nations will begin exchanging information about the status of their nuclear forces and, within weeks, hold the first on-site inspections of each other's nuclear arsenals in nearly two years.

U.S. officials say the treaty is an important step toward Obama's broader goal of nuclear disarmament, but analysts say higher hurdles loom ahead.

The United States and Russia have already signaled differences over further cuts, including on tactical nuclear weapons that many analysts regard as a more immediate danger.

The U.S. Senate has asked Obama to seek negotiations on tactical nuclear weapons within a year after START enters into force. But Russia, which has a stockpile several times larger than that of the United States, has resisted, saying talks should not be held until each country confines its tactical nuclear weapons to its own territory.